Every employee has a salary offer which is given to him at the time of joining. This structure may be revised as per his/her salary increments.
EARNINGS – GROSS SALARY
The Gross Salary of an employee includes the sum total of all the components.i.e Basic, DA, HRA, Medical, Conveyance, Incentive, Overtime, Uniform Allowance, Special Allowance, any other allowances /bonus or amount. It includes both taxable and non-taxable income. This is the earning of an individual.
Certain income heads are present every month like Basic, DA, Medical, and Conveyance. Others are included as and when it is needed e.g incentives, overtime, referral bonus, joining bonus.
The Net Salary of an employee in the final amount an employee receives in hand after all the statutory deduction and other deduction
The general statutory deductions are :
- Provident Fund Deduction (Know more about Provident Fund)
- 12 % of your (Basic Salary + DA+ Commission of % of turnover (achieved by employee)
- ESIC Deduction (Know more about ESIC)
- 1.75 % of Gross Salary ( Only if actual gross salary as per salary structure is Rs 21000 or less)
- Professional Tax (Know more about Professional Tax)
- Amount differs basis State and Monthly Gross Salary
- Income Tax ( TDS)
- Differs for employees basis salary received and their respective tax investments.
The other deduction in an employee salary are:
- Excess Mobile Recovery
- Salary Advance
- Loan EMI
- Any Other Recovery (e.g asset damage expenses, personal travel charges)
HOW TO CALCULATE MONTHLY SALARY
SAMPLE SALARY STRUCTURE
To Calculate Salary for April
Calculate the attendance for XYZ.
CALCULATE GROSS SALARY BASIS ATTENDANCE
Note : Here the employee contribution is taken on actual basic : 12 % of 22500. The same can be restricted to the statutory limit of Rs 15000/-/
CALCULATE NET SALARY
Hence the take home salary of XYZ is Rs 39815/-.
Here is how the payslip of the employee looks like: